Questions litter the Road Home

I sold my home to the Road Home last year. Earlier this year as I was preparing my taxes, I called the IRS and asked them how I should report the sale on my federal income tax return. I was told that the transaction was considered a sale, and that there would be no income tax consequences for me. But I read an article in Friday's Times-Picayune indicating that, in fact, there has been no final decision on how to handle situations such as myself. What do I do? I've already filed my return.

The best thing you can do now is wait until the IRS makes a final determination about how Road Home cases such as yours will be handled. That determination should come in two or three weeks. Depending on how the IRS rules, you may have to amend your return.

I claimed a casualty loss on my 2005 federal tax due to Katrina. My wife and I are both retired with our gross income at about $25,000. From Road Home we received $49,505 as a grant, and $50,000 from HUD because we qualified under low-income households for a Compensation Grant. As I have been reading in your column, we are to add the grant to our income to be taxed. Is the Compensation Grant from HUD to be added also?

Unfortunately, it is still unclear how -- and if -- the additional Compensation Grants will be taxed.

I have heard someone say they didn't claim a loss after Hurricane Katrina but received a grant from Road Home of $50,000. So, does that $50,000 need to be reported as income, too?

No. If they did not claim a loss, then they do not need to count Road Home grant money as income.

I guess if we have to report our Road Home grant as income, we will do it. Where on form 1040 does this get shown?

You should report your taxable Road Home money on line 21 on page one of form 1040.